Our CPF system has been abused for far too long and is in urgent need of a revamp.
The issue of retirement adequacy has never been properly addressed: allocation rates have not been amended (nor CPF interest rates increased). Even an idiot knows that one of the main causes of our retirement shortfall is allocating too much savings to the OA for, mainly, property purchase.
CPF Board should emulate Malaysia’s EPF which has not lost sight of retirement adequacy for members: 16.8%** of wages is allocated to retirement compared with CPF’s 6% to 11.5% before age 55 (average less than 7%).
CPF peanuts SA rate (average 7% until age 55) supposed to prepare members for retirement??? 😦
A short intro to EPF
The EPF is divided into A/c 1 (70%) for retirement and A/c 2 (30%) for housing, education, investment, etc.
Total EPF contribution is 24% of wages (11% employee, 13% employer).
**70% in A/c 1 = 16.8% of monthly wages.
The different outcomes in both schemes should not surprise anyone and if the PAP had really wanted to address the issue of retirement funding shortfall, SA allocation rate would have been increased.
Malaysians may have other issues related to retirement funding shortfall but this is not linked to their EPF scheme. If it was, rest assured there would have been street protests.
CPF Board should not continue to prioritise the use of our CPF for housing and should instead allocate a higher percentage of wages to the SA to earn a higher interest rate.
How could setting aside only 7% of wages below the age of 55 be adequate for retirement?
Time to learn from their Malaysian counterparts who are clearly not idiots. 🙂